No, it doesn't exist. I'm wondering how difficult it would be to make a Firefox add-on like that. If ChatZilla can connect us to IRC, then surely the same can be done for the super simple telnet muds. Right?
A sustained client-side telnet connection from inside a browser is not trivial.
Recently, Flash added support for independent socket connections, which made it possible to create Flash telnet apps like fmud. This clears a major hurdle on the way of MUD clients integrated into webpages.
A few days ago, I built a barebones telnet API using Flash AS3, which communicates information to and from javascript. The package contains an HTML wrapper which shows how you can have a basic telnet UI with ANSI colors.
Flash is more common and easier to install than FF + an addon (I think). I'm looking forward to the directions this will take us.